Amid funding delay, Tencent-backed Pratilipi asks employees to look out for jobs

Pratilipi expects revenue to grow 72 percent to Rs 60 crore, while net loss is projected to narrow down to Rs 43 crore

After delay in its December salary payouts amid a fund crunch, Tencent and Krafton-backed content platform Pratilipi has asked its employees to look out for jobs. This happened as a Rs 30 crore funding round that the company was aiming to close by the end of 2023 is taking more time than expected.

“Already Rs 21.5 crore of that money has been raised and we are in discussions about the rest. It’s more or less finalised… just that it is not in the bank yet,” said Ranjeet Pratap Singh, CEO and founder of Pratilipi.

Prior to the ongoing round, Pratilipi had raised more than $80 million (around Rs 660 crore) in total funding from high-profile investors like Tencent, Krafton, Nexus Venture Partners and Omidyar Network.

In the current round, it has attracted Rs 8 crore from Krafton and Rs 5 crore from Omidyar whereas the rest of the money is from individual angel investors.

“The way Pratilipi operates is that we are extra transparent. So, when the salary was delayed for a few days, we told employees that please find a new job if you can’t afford to be in such a situation. We didn’t want our people to suffer just because some paperwork or regulatory approvals are taking longer,” he added.

As a result, around 22 people quit the company. At the beginning of February, Pratilipi had 251 full-time employees and 31 interns/freelancers, compared to 287 full-time employees at the start of FY24.

Nearing positive cash flow

“Our monthly cash burn is about Rs 2.5 crore now, of which Rs 1.5 crore is the principal repayment of a loan from Alteria. We aim to be cash flow positive by June when the principal repayment will get over,” said Singh.

According to him, the company’s cash cow segment — literature — already became cash flow positive as a segment in January.

“The literature segment has a gross margin of 60 percent. It alone can cover the cost of everything,” he said.

The segment, which serves as Pratilipi’s bread and butter, allows Indian-language writers to share their stories on the platform and monetise it through subscription fees from readers.

The average ticket size of a subscription is around Rs 150. However, there is no hard paywall on the stories — readers can consume one chapter a day for free. It’s only when they seek to ‘binge-read’ that a subscription is required.

“I don’t know of another content company that has a negative churn. People who leave the platform after the first month often return in the following months to subscribe. This helps our retention numbers to stack up around the fifth month of a subscription,” said Singh.

The company saw its revenue rise 346 percent to Rs 34.8 crore in FY23 on a low base, while net loss narrowed from Rs 196.4 crore to Rs 152.6 crore.

However, Pratilipi expects revenue to grow 72 percent to Rs 60 crore, while net loss is projected to narrow down to Rs 43 crore.

“We have cut down our marketing spends by more than 90 percent. That has certainly hit growth, but the cash burn would also have remained at higher levels if we didn’t do that,” said Singh.

Seeking monetisation avenues

Last year, Pratilipi also struck a multi-series content deal with media and entertainment company Disney Star. As part of this deal, Disney Star will develop multiple new fiction television shows adapted from stories available on Pratilipi for its television and digital platforms.

The licensing deals can come in various shapes and forms. One is where Pratilipi can charge around Rs 8-10 lakh for a story to be adapted or 1 percent of the production budget.

The second approach is where Pratilipi works on co-developing a story for the screen where it can charge in the range of Rs 20-50 lakh.

“The third kind is where we develop the story and produce it for another platform. In that case, we make a lot more money,” said Singh.

The company’s offerings also include Pratilipi FM, which has 300,000 monthly active listeners who listen to a library of over 10,000 audiobooks and podcasts and Pratilipi Comics, an online comic product in five Indian languages with thousands of digital comics and over 500,000 monthly active readers.

The digital content startup acquired Mumbai-based IVM Podcasts to enter the podcast market in 2020 and purchased Westland Publications from Amazon to enter the traditional book publishing market in 2022. The company also bought self-publishing platform The Write Order in 2021 to expand its repository of original stories.

In March last year Pratilipi signed an agreement with Amazon owned Audible to adapt its literary bestsellers into audiobooks and audio shows that will be exclusively available on Audible for 18 months. The company said it will be producing and developing over 300 hours of content that will span a variety of genres such as romance, horror, thriller and mystery.

"The story will come from one language, one format and one geography. Then the same story will go in every other language, format and geography. That has been our goal since 2014," said Singh.